SWISS bank UBS was yesterday fined £940million for "extensive and widespread" efforts to rig interbank lending rates that are likely to lead to a flurry of lawsuits in the banking industry.

UBS admitted fraud and making corrupt payments to brokers as it sought to manipulate the key Libor lending rate which is used to price trillions of pounds worth of loans.

The fine included a record £160million penalty from the UK's Financial Services Authority as well as fines from US and Swiss Authorities. Two former UBS traders Tom Hayes and Roger Darin have been charged by US prosecutors.

It is the biggest fine so far from the industry's Libor-rigging scandal and follows the £290million paid by Barclays, the first to settle with watchdogs this summer.

A number of other major banks are yet to reach settlements as the FSA said it continued to pursue "a number of other significant cross-border investigations" into Libor, raising the prospect of civil lawsuits from those claiming losses on products linked to Libor.

Credit rating agency Fitch said though the UBS fine was bigger than expected it could be absorbed by the bank but warned it could trigger "the potential for material litigation expenses and civil settlement costs".

The FSA said the misconduct by UBS was rife between 2005 and the end of 2010 in a number of countries as UBS traders routinely made requests to colleagues responsible for determining rate submissions in an effort to benefit their own trading positions.

FSA director of enforcement and financial crime Tracey McDermott said: "UBS's misconduct was all the more serious because of the orchestrated attempts to manipulate the Japanese Libor submissions of other banks, as well as its own, and the collusion with interdealer brokers and other panel banks in co-ordinated efforts to manipulate the fix."

UBS chief Sergio Ermotti said the group had "taken decisive and appropriate actions" following the probe. He added: "We regret this inappropriate and unethical behaviour. No amount of profit is more important than the reputation of this firm and we are committed to doing business with integrity."